oil hits two year high

[awallis]

These things are tools - corporations, markets, IRAs, 401Ks, cars, trains, boats. They're vehicles designed for a particular type of movement. We can fill each with nuns or criminals.

Are corporations the problem? Or is it the crooks that use a corporation to steal that we should avoid?

I'm not sure that these tools are value-neutral, though. All of them rely on the social contract to take existence. We agree by democratic measures (more or less) to bring each of these tools into existence and give them a social standing. For example, IRA's allow you to pay fewer taxes in the present in the theory that your obligation will be fulfilled later in your life. Roth IRA's do the opposite. But each represents a vision of societal values and obligations.

Similarly, corporations are granted rights by our society in the belief that they fulfill some public good. We give them legal standing close to that of people and they are in fact referred to as "fictional persons" rather than "natural" persons in the law. In the U.S. we delineate very clear fiduciary responsibilities of corporations to their stock holders, and this drives much corporate thinking. Were we to be more forceful in saying that stock holders could be held responsible for corporate malfeasance beyond their stock holdings, i.e., that major stockholders could be sued for misdeeds of the businesses in which they invest the same way that I might be responsible/liable for someone to whom I lend my car or who is a guest in my house, then I think the world would be different. Currently, when a company such as Enron or Bear Stearns goes bankrupt, we generally believe that fiduciary responsibility covers our moral liability as well, and it is only very occasionally that a major evil-doer goes to jail, and that is usually an executive, not a board member or a major stock holder.

I could talk all day about this, so I'll spare you, but all the evidence shows me that generally normal people are wrapped up in a system (a financial and legal one) that has lost touch with the society it is intended to serve. We are not sure, except in the case of obvious thievery, how to deal with the social ills created by the system. More importantly, our manner of measuring the financial and social value of corporate competence--stock holdings, GDP, economic growth--have never been value-neutral and are therefore problematic. How do we measure pollution? If I am a shareholder should I ask my company to avoid it at all costs, or should I ask them to pollute and take the risk of being sued? Most companies do the latter because it is cheaper to pay lawyers than it is to treat water. And then, what is the true cost of polluted water, polluted air, clear-cut forests or shaved mountain-tops? Luckily, I'm rich enough not to live by a coal power plant or in the runoff zone of a mining operation, but I have no doubt that my 401k benefits financially from the suffering of people in Africa as well as Appalachia.

I'm not searching for some impossible pure investment mechanism, but I do think our country would benefit from having a better media and more real conversations about our system. We become fascinated with the personalities (Madoff, Skilling, etc.), but rather than seeing them as representative, we see them as outliers, bad apples. To me, these people are to varying degrees representative of a system that rewards asocial behavior. It's not neutral and it's not working as well as it should because for every Skilling and Madoff there are a thousand people making "business" decisions completely legally and under the mistaken moral impression that their actions are "neutral" when, in reality, with the stroke of a pen, these decisions lead to child labor, deforestation, pollution and the like.

 

[walterbays]

With gas prices up to $3.38 ($3.72 here in CA) congressmen are calling on Obama to tap the Strategic Petroleum Reserve. http://www.nytimes.com/2011/03/04/business/energy-environment/04oil.html.

I suppose Jeff Bingaman, chair of the Senate Energy Committee, would also favor cashing out your 401K if the price of Twinkies went up a dime. I don't agree with most energy and environmental positions of Fred Upton, chair of the House Energy Committee. But here he's got it right, calling for the reserve to only be used in the event of actual emergency.

 

[AndyH]

These things are tools - corporations, markets, IRAs, 401Ks, cars, trains, boats. They're vehicles designed for a particular type of movement. We can fill each with nuns or criminals.

Are corporations the problem? Or is it the crooks that use a corporation to steal that we should avoid?

I'm not sure that these tools are value-neutral, though. All of them rely on the social contract to take existence. We agree by democratic measures (more or less) to bring each of these tools into existence and give them a social standing.

The tool exists. WE choose whether or not to use it, and how we'll use it.

For example, IRA's allow you to pay fewer taxes in the present in the theory that your obligation will be fulfilled later in your life. Roth IRA's do the opposite. But each represents a vision of societal values and obligations.

Are we assigning more to an IRA than is there? It's simply a tool - a box. We choose to use it or not. If we decide we want one, we can fill it with silver coins, baseball cards, or stock certificates. More importantly, what are we automatically assuming when we choose a traditional IRA? The IRA is based on the premise that we'll have our largest rate of cash flow during our working years, and that our income will decrease when we retire. When we choose - CHOOSE! - to use an IRA, we're also 'buying in' to that view of reality. We don't have to!

Similarly, corporations are granted rights by our society in the belief that they fulfill some public good. We give them legal standing close to that of people and they are in fact referred to as "fictional persons" rather than "natural" persons in the law. In the U.S. we delineate very clear fiduciary responsibilities of corporations to their stock holders, and this drives much corporate thinking. Were we to be more forceful in saying that stock holders could be held responsible for corporate malfeasance beyond their stock holdings, i.e., that major stockholders could be sued for misdeeds of the businesses in which they invest the same way that I might be responsible/liable for someone to whom I lend my car or who is a guest in my house, then I think the world would be different. Currently, when a company such as Enron or Bear Stearns goes bankrupt, we generally believe that fiduciary responsibility covers our moral liability as well, and it is only very occasionally that a major evil-doer goes to jail, and that is usually an executive, not a board member or a major stock holder.

Again - the focus is on the folks 'driving the car' not on the car itself! The corporate structure is simply a tool designed to spread liability if things go wrong, and spread the benefits when things go right. One can have a corporation that drills for oil, installs solar panels, or provides retirement housing for nuns.

I could talk all day about this, so I'll spare you, but all the evidence shows me that generally normal people are wrapped up in a system (a financial and legal one) that has lost touch with the society it is intended to serve. We are not sure, except in the case of obvious thievery, how to deal with the social ills created by the system. More importantly, our manner of measuring the financial and social value of corporate competence--stock holdings, GDP, economic growth--have never been value-neutral and are therefore problematic. How do we measure pollution? If I am a shareholder should I ask my company to avoid it at all costs, or should I ask them to pollute and take the risk of being sued? Most companies do the latter because it is cheaper to pay lawyers than it is to treat water. And then, what is the true cost of polluted water, polluted air, clear-cut forests or shaved mountain-tops? Luckily, I'm rich enough not to live by a coal power plant or in the runoff zone of a mining operation, but I have no doubt that my 401k benefits financially from the suffering of people in Africa as well as Appalachia.

I'm not searching for some impossible pure investment mechanism, but I do think our country would benefit from having a better media and more real conversations about our system. We become fascinated with the personalities (Madoff, Skilling, etc.), but rather than seeing them as representative, we see them as outliers, bad apples. To me, these people are to varying degrees representative of a system that rewards asocial behavior. It's not neutral and it's not working as well as it should because for every Skilling and Madoff there are a thousand people making "business" decisions completely legally and under the mistaken moral impression that their actions are "neutral" when, in reality, with the stroke of a pen, these decisions lead to child labor, deforestation, pollution and the like.

They also lead to planting trees, building schools, and remediation.

I would actually suggest that 'normal people' buy into the mass delusion that they must work for 30 years, buy a lot of toys, watch TV, and upgrade our houses with each pay-raise. We choose - and we have to accept all the parts. When we sit down to a chess board, we don't get to decide that the pawns can move backward. We chose to play - or get a hot dog. On a big-picture level, that which is 'greater' than us is a reflection of the mass consciousness. It's real 'majority rule'! Yet it's fractal - we can zoom in and see eco communities, efficient housing, EVs, and responsibly run corporations. They're all there too! This planet provides us with every oportunity - on what shall we choose to focus?

We don't buy a dog and then spend the rest of our life in misery because it doesn't meow. We also don't search the world over for a tropical fish that lives in a cage and sings at sunrise. It's just as insane to expect the media to stop doing what it does because we don't appreciate the topless girl on page 3. They will continue to talk about Madoff or wardrobe malfunctions until people stop buying it! Limbaugh will retire somewhere when people stop listening and/or when advertising money dries up. Disconnect and it will all go away from your experience!

I cannot control you or Madoff or BP or Soros or Murdoch - I can only control me. When I got fed up with manipulative commercials, I dumped cable and stopped watching TV. I get to choose where I work, how I get my electricity, and what companies to buy.

We already know some of the things that can be done with a corporation. How about another example:

- Mr. Smith decides early in life that he's going to build investments that bring him cash flow so he can stop working for money. He creates a corporation thru which he buys shares of dividend-bearing stocks. The corporate structure protects his hard-earned assets from being a litigation target and provides tax benefits. When his quarterly dividend payments exceed his salary, he is free to chose to work or not. He realizes that his house is not an asset, because even if the mortgage is paid off he can still lose the house if he's sued or if he misses property tax payments. He choses not to pay-off the mortgage, and puts the house in a trust.

Grab a copy of Kiyosaki's "Rich Dad Poor Dad" and Ferriss' "The Four Hour Work Week". If interested, also grab a copy of "Inc. and Grow Rich". (An original printing of Napoleon Hill's "Think and Grow Rich" is also highly recommended.) And no - none of these is really about 'money'.

 

[Smidge204]

The tool exists. WE choose whether or not to use it, and how we'll use it.

Tools are usually created for a purpose.

I'm not going to say anything like "corporations are the enemy of society" - but corporations are not your friend either. You have a point that it is up to the company executives to operate it responsibly - but the entire point of the corporation is to protect those people from the consequences of their actions.

Give someone a chance to have a "get out of jail free" card and of course you're going to attract some terrible people. The only real solution here is to nerf the power of corporations, at least enough so that the people who cause the problems are not protected from the consequences.

To use your car example: If someone drives a car irresponsibly and causes damage or harm, the operator is held accountable. If someone operates a corporation irresponsibly and causes damage or harm, they are protected. Add in the fact that irresponsible behavior is actually rewarded in many cases - how many people would drive responsibly if there were no consequences <i>and</i> they get rewarded for it?

To use your other example: Mr. Smith decides to run a shady trading scheme through his corporation - say, borrowing money to buy mortgages, packaging them together, falsely reporting their value and reselling them. He makes money hand over fist as long as he keeps the paperwork flowing. When the whole thing collapses, Mr. Smith is essentially untouchable while all the people he sold poisonous mortgages to - all the people he borrowed money from - are S.O.L. and the global economy falls into a slump from which it is yet to fully recover. His corporation takes a hit and he walks away from it. How do you plan to rationalize the corporate sanctuary Mr. Smith enjoys?

(Any similarity with the above scenario and real events is entirely coincidental, I assure you. )

But you're right - a corporation is neutral. It's just a tool... a tool that protects criminals. It's my opinion that the tool needs some refinements.
=Smidge=

 

[DaveEV]

With gas prices up to $3.38 ($3.72 here in CA) congressmen are calling on Obama to tap the Strategic Petroleum Reserve. http://www.nytimes.com/2011/03/04/business/energy-environment/04oil.html.

I suppose Jeff Bingaman, chair of the Senate Energy Committee, would also favor cashing out your 401K if the price of Twinkies went up a dime. I don't agree with most energy and environmental positions of Fred Upton, chair of the House Energy Committee. But here he's got it right, calling for the reserve to only be used in the event of actual emergency.

Heh. I could see pulling oil out of the reserves if you knew for sure it was a short term disruption (say pipeline issue or something), but I don't think pulling oil out of reserves is going to provide any long term benefit unless they can predict the future unrest in the middle east and time things perfectly.

 

[TRONZ]

I have a simple way of thinking towards corrupt Corporations from a man I hold in high regard;

"First were going to cut it off. Then were going to KILL IT!"
Colin Powell

Just totaled up our electrical cost for driving our LEAF in Feb. We drove 942.5 miles for a cost of $31.11! Based on our usual Hybrid Civic gasoline costs, we cut off $180 from Oil Companies in our very first month without even trying. This will be $2,160 every year from here on out. Now most people don't drive a hybrid and gas prices continue to rise. Let's say Average Joe spends $3,000 a year on gas for his daily driver. With 20,000 LEAFs that cuts off $60,000,000. With 250,000 EV's that's $750,000,000. With a Million EV's that's $3,000,000,000 of funding cut off from Oil every year.

Sounds like the start of a good plan to me!

 

[mwalsh]

With a Million EV's that's $3,000,000,000 of funding cut off from Oil every year.

Sounds like the start of a good plan to me!

+1. And then lets go forward with giving the remaining revenue to those oil companies who have proved they can be ethical and environmentally responsible (if there is such an animal).

 

[TRONZ]

With a Million EV's that's $3,000,000,000 of funding cut off from Oil every year.

Sounds like the start of a good plan to me!

+1. And then lets go forward with giving the remaining revenue to those oil companies who have proved they can be ethical and environmentally responsible (if there is such an animal).

I would be willing to suggest that once the Oil Industry faces REAL competition from EV's, some will clean up their act and even drop prices as well. With REAL competition, Prices and Environmental Accountability will work in lock step with the actual market share of gas vs electric vehicles. Once EV's become the majority, people will have little patience or need to tolerate the usual Oil Industry price increase and pollution games.

 

[DaveEV]

Sounds like the start of a good plan to me!

Yep - and that's with replacing an efficient hybrid - I'll be replacing a 22 mpg gas guzzler. Granted, I don't drive as many miles (about 600 mi/month, 23 gallons/month and $80/month). Replacing those 23 gallons/month with about 190 kWh / month (assuming only 3 mi / kWh) if I can charge offpeak should cost less than $19. The gas money is low as it's used historical prices over the past year - it's more like $100/mo now.

 

[TRONZ]

Sounds like the start of a good plan to me!

(assuming only 3 mi / kWh)

You would be surprised. I drive like a speeding idiot and have a 3.8 mile/kWh average. The top LEAF drivers in Japan are getting well over 8 mile/kWh! I think each of us is having fun in our own way :twisted: .

 

[AndyH]

http://www.npr.org/2011/03/04/13425...se-They-Become-A-Bigger-Economic-Threat?ps=rs

Heres a rough rule of thumb: When the price of oil goes up by $10 a barrel, the price of a gallon of gas goes up by about 25 cents at the pump. Thats a noticeable jump when youre filling up your tank. But it isnt big enough to cause a meaningful change in how much people drive, or how fuel-efficient their cars are.

http://www.npr.org/2011/03/04/134270903/oil-prices-highest-since-2008-amid-libya-fighting

Most of Libya's oil production has been shut down because of the crisis, and experts say the country's oil fields will be threatened as long as there's no clear leader in charge.

Saudi Arabia has increased production to make up for the loss of Libyan crude, but a lengthy struggle could put significant pressure on world supplies. Traders are concerned that anti-government protesters will further challenge neighboring regimes in the region. North Africa and the Middle East are home to the largest oil producers on earth and export a quarter of the world's oil.

 

[AndyH]

With REAL competition, Prices and Environmental Accountability will work in lock step with the actual market share of gas vs electric vehicles.

Who's going to fight for the environmental accountability? There are at least two bills working thru the system right now - including one from the President - that cut funding for the EPA. The Republican's are pushing hard to not only remove the EPA's ability to regulate green house gases from both autos and stationary emitters, but they're working a separate action to attack funding.

We're going to need many, many more EVs than the President's 1,000,000 goal to even get the oil industry's attention. And if we focus on the EV goal to the exclusion of all else, the opposition will be slowly gutting the EPA.

 

[evnow]

http://www.npr.org/2011/03/04/134270903/oil-prices-highest-since-2008-amid-libya-fighting

Saudi Arabia has increased production to make up for the loss of Libyan crude, but a lengthy struggle could put significant pressure on world supplies.

Saudi Arabia increasing production doesn't mean too much (even if they actuall did).

The marginal production in KSA is the sour oil - unlike the sweet light crude that Libya produces. Most refineries can't consume this sour oil - so countries like Ireland that were dependant on Libyan crude need to find alternate sweet crude - whose price will go up (and is going up).

http://www.theoildrum.com/node/7550

 

[evnow]

I would be willing to suggest that once the Oil Industry faces REAL competition from EV's, some will clean up their act and even drop prices as well. With REAL competition, Prices and Environmental Accountability will work in lock step with the actual market share of gas vs electric vehicles. Once EV's become the majority, people will have little patience or need to tolerate the usual Oil Industry price increase and pollution games.

Unfortunately, in the real world it will not play out like that.

For every EV sold, there will be a 1,000 new ICE car owners in China & India. By the time EVs are more than a drop in the ocean we will looking at serious oil production declines and thus shortages.

I'm afraid EVs are a couple decades too late to save the party.

 

[AndyH]

The tool exists. WE choose whether or not to use it, and how we'll use it.

Tools are usually created for a purpose.

I'm not going to say anything like "corporations are the enemy of society" - but corporations are not your friend either. You have a point that it is up to the company executives to operate it responsibly - but the entire point of the corporation is to protect those people from the consequences of their actions.

Give someone a chance to have a "get out of jail free" card and of course you're going to attract some terrible people. The only real solution here is to nerf the power of corporations, at least enough so that the people who cause the problems are not protected from the consequences.

To use your car example: If someone drives a car irresponsibly and causes damage or harm, the operator is held accountable. If someone operates a corporation irresponsibly and causes damage or harm, they are protected. Add in the fact that irresponsible behavior is actually rewarded in many cases - how many people would drive responsibly if there were no consequences <i>and</i> they get rewarded for it?

To use your other example: Mr. Smith decides to run a shady trading scheme through his corporation - say, borrowing money to buy mortgages, packaging them together, falsely reporting their value and reselling them. He makes money hand over fist as long as he keeps the paperwork flowing. When the whole thing collapses, Mr. Smith is essentially untouchable while all the people he sold poisonous mortgages to - all the people he borrowed money from - are S.O.L. and the global economy falls into a slump from which it is yet to fully recover. His corporation takes a hit and he walks away from it. How do you plan to rationalize the corporate sanctuary Mr. Smith enjoys?

(Any similarity with the above scenario and real events is entirely coincidental, I assure you. )

But you're right - a corporation is neutral. It's just a tool... a tool that protects criminals. It's my opinion that the tool needs some refinements.
=Smidge=

Many thousands of people are killed each year driving cars. We should revoke all driving licenses and gather up all privately owned vehicles - obviously vehicles and their drivers should not be allowed to live! Cars only exist to protect drunk and drugged drivers that text while shaving, anyway, right? :?

I understand completely that there are nut-cases in this like any other part of the human pool where one can find a lot of...humans. And I certainly do understand the viewpoint that most large corporations appear to be sociopaths. But I cannot agree with a blanket statement that suggests that corporations are bad because there are people using them to contain their Ponzi schemes. One can certainly focus on the 1/2 of 1% of criminals if they choose, but that practice causes one to be incapable of seeing the 99.5% that are doing what they should be doing.

Keep in mind - like it or not - that the vast majority of corporations are acting legally. If one doesn't think that energy companies should be allowed to emit radioactive waste, mercury, or arsenic downwind of a coal plant, they should probably join with others working to change the laws because today it's legal.

I'll step away from this for now. Thanks for the interesting views!

Andy

 

[edatoakrun]

Unfortunately, in the real world it will not play out like that.

For every EV sold, there will be a 1,000 new ICE car owners in China & India. By the time EVs are more than a drop in the ocean we will looking at serious oil production declines and thus shortages.

I'm afraid EVs are a couple decades too late to save the party.

I think "the party" could go on for a long time, if we let it.

"Conventional" oil production will probably soon peak worldwide, if it hasn't already. But there are plenty of alternative hydrocarbon fuels. Coal, shale (both oil and natural gas bearing), and tar sands, that can be used to produce liquid fuels, diesel and gasoline.

Canadian tar sands are already a significant source of petroleum products, and formerly uneconomic shale formations have now been tapped to produce a natural gas glut in America. We are probably pretty close to the cost, somewhere between $100 and $200 a barrel oil, that will make widespread use of coal and oil shale practical sources of gas and diesel fuel.

So, I don't think gas prices are likely to average much higher than $3-$6 a gallon (inflation adjusted) long term, even though they probably will continue to spike and crash erratically as they have for the last 40 years.

The real problem is, unless we develop carbon sequestration, all these fuels will be even more polluting than conventional oil. Each year the CO2 pollution release in the production of a gallon of gas consumed in America rises as tar sands oil production increases.

The energy glut in North America may transform it, in the next few decades, into a net energy exporting region for the first time since the 1940's. Canada is looking to export natural gas to pricier Asian and European markets, and US coal producers are looking for cheaper routes to Asia.

"Those exports can't really take off, however, unless West Coast ports dramatically expand their deepwater loading capacity. That's why, for instance, Arch Coal has teamed up with an Australian company to propose a new port development in Longview, Wash., that would help funnel 5 million tons of coal a year to Asia."

http://www.latimes.com/news/opinion/commentary/la-oe-mckibben-coal-20110305,0,5968469.story

 

[Smidge204]

Many thousands of people are killed each year driving cars. We should revoke all driving licenses and gather up all privately owned vehicles - obviously vehicles and their drivers should not be allowed to live! Cars only exist to protect drunk and drugged drivers that text while shaving, anyway, right? :?

Easy now - I never said corporations shouldn't exist. But if someone gets killed because of a careless driver, that driver IS liable to be punished. This is not true for corporations, and that's the problem. I'm not saying corporations are de-facto bad - I'm saying the structure is such that it protects and even encourages bad things and that needs to be changed.

For every EV sold, there will be a 1,000 new ICE car owners in China & India. By the time EVs are more than a drop in the ocean we will looking at serious oil production declines and thus shortages.

Can't say much about India, but if reports here and there are anything to go by China is doing more to get their sh*t together than anyone else. I think they realize that a petroleum addiction is going to hurt them in the long term and are more serious about it. Just the impression I get. EVs are just a part of it...

May or may not be too late, as you said, but that doesn't mean we should do nothing yeah?
=Smidge=

 

[AndyH]

Many thousands of people are killed each year driving cars. We should revoke all driving licenses and gather up all privately owned vehicles - obviously vehicles and their drivers should not be allowed to live! Cars only exist to protect drunk and drugged drivers that text while shaving, anyway, right? :?

Easy now - I never said corporations shouldn't exist. But if someone gets killed because of a careless driver, that driver IS liable to be punished. This is not true for corporations, and that's the problem. I'm not saying corporations are de-facto bad - I'm saying the structure is such that it protects and even encourages bad things and that needs to be changed.

Yet isn't Madoff in prison? Isn't BP being run thru the ringer? (not enough yet considering the damage done, but their reputation is damaged, they've had to sell off a number of large assets and restructure, and this before the court cases convene - it ain't over yet. )

In order to keep the liability in check, it's a requirement that the corporation be run properly and legally. Otherwise, the corporate veil can be 'punctured' and the management and board and/or employees can be found personally liable as well as corporately liable. The corporate structure is not a 'get out of jail free' card.

I agree that there are plenty of laws that need work - especially those dealing with externalities and the environment. But I cannot agree that the corporate structure encourages bad things.

 

[evnow]

For every EV sold, there will be a 1,000 new ICE car owners in China & India. By the time EVs are more than a drop in the ocean we will looking at serious oil production declines and thus shortages.

Can't say much about India, but if reports here and there are anything to go by China is doing more to get their sh*t together than anyone else. I think they realize that a petroleum addiction is going to hurt them in the long term and are more serious about it. Just the impression I get. EVs are just a part of it...

Look at the numbers. How many EVs were sold in 2010 vs new car owners ? A few thousand EVs isn't going to even mitigate the problem when millions are becoming first time car owners.

May or may not be too late, as you said, but that doesn't mean we should do nothing yeah?

I'm all for getting prepared - both mentally and in practical ways. Important thing is to be always grounded in reality.

 

[AndyH]

May or may not be too late, as you said, but that doesn't mean we should do nothing yeah?

I'm all for getting prepared - both mentally and in practical ways. Important thing is to be always grounded in reality.

I'm beginning to think that the 'reality' part is the limiting factor. Perception is reality, and perception is heavily influenced by beliefs and assumptions.

Some time back in a leadership class, a psychologist recounted research conducted in Australia. Anthropologists studying Aboriginal people brought some to the city for the first time. The folks from the outback had heard of cars and were looking forward to seeing them as well as the city. The group was preparing to cross the street and waited for cars to move past. Traffic cleared and one of the gentlemen stepped into the street - and was quickly knocked down by a bicyclist. The man had never heard of a bicycle and because he didn't have an awareness that it existed his brain did not allow him to see it.

Reticular Activating System

First, you can deliberately program the reticular activating system by choosing the exact messages you send from your consicous mind. For example, you can set goals, or say affirmations, or visualize your goals. Napoleon Hill said that we can achieve any realistic goal if we keep on thinking of that goal, and stop thinking any negative thoughts about it. Of course, if we keep thinking that we can't achieve a goal, our subconscious will help us NOT achieve it.

The question I have for all you smart folks is: how can we get more people - especially our politicians - into the same version of 'reality' so we can do the critical things we need to do?